Canadian Securities Course (CSC) Exam Test
Questions And Correct Answers (Verified Answers)
Plus Rationales 2025/2026 Q&A | Instant
Download Pdf
1. What is the primary role of the Investment Industry Regulatory
Organization of Canada (IIROC)?
Regulate investment dealers and trading activity on Canadian debt and
equity marketplaces
Rationale: IIROC oversees investment dealers and their representatives to
ensure compliance with rules and maintain fair, efficient, and transparent
markets.
2. Which of the following securities is considered a fixed-income investment?
Corporate bonds
Rationale: Corporate bonds provide fixed interest payments to investors,
unlike equities which offer ownership rights.
3. Which type of preferred share allows unpaid dividends to accumulate?
Cumulative preferred shares
Rationale: Cumulative preferred shares require missed dividends to be
paid before common shareholders receive dividends.
,4. What does a mutual fund’s Net Asset Value (NAV) per unit represent?
Market value of fund assets minus liabilities divided by number of units
outstanding
Rationale: NAV is the standard pricing measure for mutual fund units,
calculated daily.
5. Which risk is best mitigated through diversification?
Unsystematic risk
Rationale: Unsystematic (company-specific) risk can be reduced by
holding a variety of securities. Systematic risk cannot be eliminated.
6. What is the main purpose of the Canada Deposit Insurance Corporation
(CDIC)?
Protect depositors against loss of eligible deposits in member institutions
Rationale: CDIC insures eligible deposits up to $100,000 per depositor per
institution.
7. Which order type executes immediately at the best available price?
Market order
Rationale: Market orders prioritize execution over price, ensuring
immediate fulfillment.
8. What is a key feature of Treasury bills?
They are sold at a discount and mature at face value
Rationale: T-bills do not pay interest; instead, investors earn income from
the difference between purchase price and maturity value.
9. Which investment product typically carries the lowest credit risk?
Government of Canada bonds
, Rationale: These bonds are backed by the federal government and
considered virtually risk-free.
10.Which financial statement shows a company’s profitability over a period?
Income statement
Rationale: The income statement reports revenues, expenses, and net
income for a period of time.
11.A bond with a call provision allows the issuer to:
Repay the bond before maturity
Rationale: Call provisions give issuers flexibility to refinance debt when
interest rates fall.
12.What does “liquidity” in an investment refer to?
How quickly and easily it can be converted into cash without significant
loss
Rationale: Liquidity reflects marketability and ease of selling an asset.
13.What is the main function of the Bank of Canada?
Implement monetary policy to control inflation and stabilize the economy
Rationale: The Bank of Canada regulates money supply and interest rates
to maintain economic stability.
14.Which ratio best measures a company’s short-term liquidity?
Current ratio
Rationale: The current ratio compares current assets to current liabilities
to assess liquidity.
15.Which investment offers direct ownership in a company?
Common shares
, Rationale: Common shares represent equity ownership with voting rights
and dividend potential.
16.The primary purpose of asset allocation is to:
Balance risk and return across different asset classes
Rationale: Asset allocation helps manage portfolio risk by diversifying
among equities, bonds, and cash.
17.What type of account is registered with tax-deferred growth on
investments?
Registered Retirement Savings Plan (RRSP)
Rationale: RRSP contributions are tax-deductible and growth is tax-
deferred until withdrawal.
18.Which measure indicates the volatility of a security relative to the market?
Beta
Rationale: Beta compares a stock’s movements to market movements,
with beta >1 indicating higher volatility.
19.Which financial instrument is most suitable for hedging currency risk?
Forward contract
Rationale: Forward contracts lock in an exchange rate for a future
transaction, protecting against currency fluctuations.
20.Which type of preferred share provides the right to convert into common
shares?
Convertible preferred shares
Rationale: These shares give investors the option to exchange for common
stock under specified conditions.
Questions And Correct Answers (Verified Answers)
Plus Rationales 2025/2026 Q&A | Instant
Download Pdf
1. What is the primary role of the Investment Industry Regulatory
Organization of Canada (IIROC)?
Regulate investment dealers and trading activity on Canadian debt and
equity marketplaces
Rationale: IIROC oversees investment dealers and their representatives to
ensure compliance with rules and maintain fair, efficient, and transparent
markets.
2. Which of the following securities is considered a fixed-income investment?
Corporate bonds
Rationale: Corporate bonds provide fixed interest payments to investors,
unlike equities which offer ownership rights.
3. Which type of preferred share allows unpaid dividends to accumulate?
Cumulative preferred shares
Rationale: Cumulative preferred shares require missed dividends to be
paid before common shareholders receive dividends.
,4. What does a mutual fund’s Net Asset Value (NAV) per unit represent?
Market value of fund assets minus liabilities divided by number of units
outstanding
Rationale: NAV is the standard pricing measure for mutual fund units,
calculated daily.
5. Which risk is best mitigated through diversification?
Unsystematic risk
Rationale: Unsystematic (company-specific) risk can be reduced by
holding a variety of securities. Systematic risk cannot be eliminated.
6. What is the main purpose of the Canada Deposit Insurance Corporation
(CDIC)?
Protect depositors against loss of eligible deposits in member institutions
Rationale: CDIC insures eligible deposits up to $100,000 per depositor per
institution.
7. Which order type executes immediately at the best available price?
Market order
Rationale: Market orders prioritize execution over price, ensuring
immediate fulfillment.
8. What is a key feature of Treasury bills?
They are sold at a discount and mature at face value
Rationale: T-bills do not pay interest; instead, investors earn income from
the difference between purchase price and maturity value.
9. Which investment product typically carries the lowest credit risk?
Government of Canada bonds
, Rationale: These bonds are backed by the federal government and
considered virtually risk-free.
10.Which financial statement shows a company’s profitability over a period?
Income statement
Rationale: The income statement reports revenues, expenses, and net
income for a period of time.
11.A bond with a call provision allows the issuer to:
Repay the bond before maturity
Rationale: Call provisions give issuers flexibility to refinance debt when
interest rates fall.
12.What does “liquidity” in an investment refer to?
How quickly and easily it can be converted into cash without significant
loss
Rationale: Liquidity reflects marketability and ease of selling an asset.
13.What is the main function of the Bank of Canada?
Implement monetary policy to control inflation and stabilize the economy
Rationale: The Bank of Canada regulates money supply and interest rates
to maintain economic stability.
14.Which ratio best measures a company’s short-term liquidity?
Current ratio
Rationale: The current ratio compares current assets to current liabilities
to assess liquidity.
15.Which investment offers direct ownership in a company?
Common shares
, Rationale: Common shares represent equity ownership with voting rights
and dividend potential.
16.The primary purpose of asset allocation is to:
Balance risk and return across different asset classes
Rationale: Asset allocation helps manage portfolio risk by diversifying
among equities, bonds, and cash.
17.What type of account is registered with tax-deferred growth on
investments?
Registered Retirement Savings Plan (RRSP)
Rationale: RRSP contributions are tax-deductible and growth is tax-
deferred until withdrawal.
18.Which measure indicates the volatility of a security relative to the market?
Beta
Rationale: Beta compares a stock’s movements to market movements,
with beta >1 indicating higher volatility.
19.Which financial instrument is most suitable for hedging currency risk?
Forward contract
Rationale: Forward contracts lock in an exchange rate for a future
transaction, protecting against currency fluctuations.
20.Which type of preferred share provides the right to convert into common
shares?
Convertible preferred shares
Rationale: These shares give investors the option to exchange for common
stock under specified conditions.
